A subsidiary, subsidiary company or daughter company[1][2][3] is a company owned or controlled by another company, which is called the parent company or holding company, which has legal and financial control over the company.[4][5] Two or more subsidiaries that either belong to the same parent company or having a same management being substantially controlled by same entity/group are called sister companies. The subsidiary will be required to follow the laws where it is headquartered and incorporated. It will also maintain its own executive leadership.
The subsidiary can be a company (usually with limited liability) and may be a government-owned or state-owned enterprise. They are a common feature of modern business life, and most multinational corporations organize their operations in this way.[6] Examples of holding companies are Berkshire Hathaway,[7] Jefferies Financial Group, The Walt Disney Company, Warner Bros. Discovery, or Citigroup; more focused companies include IBM, Xerox, and Microsoft. These, and others, organize their businesses into national and functional subsidiaries, often with multiple levels of subsidiaries.
A subsidiary functions as a separate legal entity rather than a division of the parent company. It is sometimes referred to as a daughter company.